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Which statement correctly distinguishes the micro environment from the macro environment of a business?

A firm can often influence micro environment factors like its customers, suppliers and intermediaries through its own decisions, but it generally cannot control macro factors such as inflation, regulation or culture, which affect all businesses broadly. Hence the first statement is correct and the others reverse or distort this.

  1. AThe firm can usually influence some micro factors, such as its relations with customers and suppliers, but it generally cannot control macro factorsCorrect
  2. BThe firm fully controls macro factors but not micro factors
  3. CBoth micro and macro factors are completely controllable by the firm
  4. DMicro factors affect all firms in an economy equally, while macro factors affect only one firm

Explanation

Micro factors are specific to the firm and are close to it, so the firm can influence them through its policies, pricing and relationships. Macro factors such as inflation, laws or culture affect all firms in the industry or economy and are largely beyond the control of one firm. The reversed statements are therefore wrong.

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